SAN BERNARDINO, CA - JULY 12: San Bernardino City Hall is reflected in the windows of one of the vacant buildings across the street on July 12, 2012 in San Bernardino, California. The San Bernardino City Council voted this week to file for Chapter 9 bankruptcy protection, making San Bernardino the second largest municipality in the nation ever to file for bankruptcy and the third in California to opt for bankruptcy in the past two weeks. Stockton, California with a population of nearly 300,000, became the biggest when it filed for bankruptcy on July 3, and the Sierra Nevada Mountains ski town of Mammoth Lakes, California filed onte same day. Rightfully, residents are concerned by what they are reading in the press -- California cities are filing for bankruptcy because their deficits outweigh their revenues. So when the Mayor announces a "deficit" here in Long Beach -- it sends chills up the spines of those many.With all due respect to the seriousness of the financial situations at San Bernardino, Stockton and Vallejo -- I know those cities and believe me, Long Beach is no San Bernardino, Stockton or Vallejo.
Here is why:
- In each of those cities, money was spent on developments that obligated the city funds at a time revenues were on the decline because of the real estate market and stock market bust. Long Beach did not undertake similar projects -- even though it has been approached on recent occasions to consider tearing down city hall and leasing (to buy) a new city hall.
- In the case of San Bernardino, apparently the budget figures given to the council were bogus for 16 years -- and their budget wasn 't balanced. Due to the diligence of several council members who ask in depth questions about the budget, the budgets are real in Long Beach.
- In all cities, lifetime health care benefits were given to employees. Long Beach DOES NOT provide such a costly benefit.
- Those three cities were unable (or unwilling) to negotiate pension reforms with their employees -- to have employees pay their contributions and to increase retirement age and to reduce the amount paid out at retirement. Long Beach has been very successful in negotiating these reforms with our employees groups -- we are awaiting the final agreement with our miscellaneous employee (non public safety) group to have this completed.
- Unlike the three other cities, Long Beach owns and operates its own port, airport, oil wells, gas utility and water utility.
- Unlike the other three cities, Long Beach historically has placed sufficient funds into its reserves. San Bernardino apparently only had $115,000 in reserves. That is outrageous.
- In all three cases, the bankruptcy law does not allow the cities to escape their pension debt. Long Beach also cannot escape its pension debt or unfunded liability. (It's like a mortgage. You get something in return for the promise to pay off the cost of that something over a long period of time. The city agreed to pay for pensions of its employees. It cannot suddenly decide it doesn't want to.)
1. Adhere to Responsible Management and Fiscal Practices
2. Focus on Core Services
3. Pursue Alternative Service Delivery Models
4. Maintain a Sustainable Workforce
5. Raise New Revenues while Protecting and Maximizing Existing Sources
I will continue discussing our City finances as we begin the FY 2013 Budget cycle. I will continue asking questions and demanding the best for the residents of Long Beach.
